'Steel demand may double in 6 years'

Subhash Narayan, Nov 9, 2009, 05.07am IST

(Virbhadra Singh, Union…)

The Indian steel sector has not only started to show signs of growth, but has also given enough indication that it would pick up pace in the coming months. In an interview with ET, the Union steel minister Virbhadra Singh says that unless the country creates a capacity of nearly 124 million tonne in the next 3-4 years, it may be difficult for it to meet the demand in the country. Excerpts:

The steel ministry has set up an ambitious target of achieving 124 million tonne steel production by 2012. Do you think, in the current economic situation, the target is achievable?

The global crisis has failed to dampen the spirit of economic growth here. Particularly, the steel sector here had started showing signs of recovery somewhere in January, when positive growth in steel demand in the country was visible. During the first six months of 2009-10, steel consumption here has shown 7% growth. Steel demand here continues to be strong and is likely to double within the next 5-6 years. Unless we build capacity of nearly 124 million tonne by the next 3-4 year, it may be difficult for us to meet the demand for steel in the country.

What do you plan to do to see that the proposed steel projects come up on time?

A few greenfield projects have already made substantial progress in critical areas such as land acquisition and allocation of mineral resources. One of the major reasons impeding the early establishment of greenfield steel projects is the land acquisition, combined with rehabilitation and resettlement. Adequate compensation for land and effective rehabilitation, in my opinion, are two solutions to overcome this obstacle. The major steel investors must find ways to include the project-affected people as stakeholders in their concerned projects.

Taking the current status of progress, I believe Posco project in Orissa would be able to take off soon. ArcelorMittal has been allocated mineral resources. The land acquisition of the company in Orissa and Jharkhand has also made some progress. An Inter Ministerial Group has been constituted and is already functioning under the chairmanship of secretary (steel) to monitor the progress of the projects.

Do you think there is a need for government intervention to check rise in steel prices?

The market prices are stable and there is no need to take any kind of restrictive action. However, the government is continuously monitoring the international price movement vis-a-vis the situation in the domestic market. As and when necessary, we will initiate appropriate actions.

After SAIL, which other PSUs has the ministry lined up for disinvestment?

Apart from SAIL, the steel ministry has identified MOIL and NMDC as the other potential PSUs which would be taken up for divestment.

Do you think that companies like SAIL should be given a chance to expand globally?

SAIL is in the midst of an expansion plan whereby its capacity will increase to 20 million tonne of saleable steel by 2012. Hence, a company like SAIL, with strong fundamentals, should definitely be given a chance to expand beyond domestic boundaries.